SAN FRANCISCO - In an effort to meet the Legislature's stringent requirement
for regulations implementing SB 899 by January 1, 2005, the California Department
of Industrial Relations' (DIR), Division of Workers' Compensation (DWC) today
filed its permanent disability rating schedule emergency regulations with
the Office of Administrative Law (OAL), according to Andrea Hoch, administrative
director of DWC.

"Earlier this year, the Legislature overwhelmingly passed workers' compensation
reforms to fix a broken system in which costs were out of control," said
Victoria Bradshaw, Secretary of the Labor and Workforce Development Agency,
which oversees DIR. "Once these regulations are in place, California's
disability rating system will for the first time, be based on objective medical
findings instead of subjective factors and work restrictions manipulated by
the legal system, just as intended by SB 899."

Permanent disability benefits are paid to injured workers who will never
recover completely from their injury and will always be somewhat limited in
their ability to work. Before those benefits can be paid, a worker's level
of disability must be rated.

"This new schedule represents a fundamental shift in the way disabilities
are rated and promotes consistency, uniformity and objectivity," Bradshaw
said. "As a result, the new rating method will bring about the cost savings
desired by an overwhelming majority of the Legislature and the Governor."

Once a worker's injury is well stabilized and unlikely to change substantially,
the worker's level of disability can be assessed. Under the new regulations,
an evaluating physician first rates the worker's impairment based on American
Medical Association (AMA) guides. Then the impairment ratings are converted
to a whole person impairment standard. The impairment standard is then adjusted
to account for the worker's diminished future earning capacity - a completely
new factor - occupation, and age at the time of injury to obtain a final permanent
disability rating. The diminished future earning capacity adjustment is based
on a numeric formula using the empirical data from the December 2003 study
by the Rand Institute for Civil Justice. All categories of disability are
increased to some extent under the new rating schedule based on the diminished
future earnings capacity factor.

"Under the new schedule, workers with the most serious injuries, as
measured by doctors using the AMA guides, will receive increased disability
benefits while workers with less serious injuries may receive somewhat lower
amounts," said Bradshaw. "This method will rid the disability rating
system of subjective drivers that increase costs, which is a critical component
of SB 899."

The proposed PDRS regulations have been provided to a diverse advisory group
that includes employer, labor, medical provider, applicant and defense counsel
and insurer representatives for comment - the same process used to develop
the medical provider network (MPN) regulations.

OAL has up to 10 days to consider the regulations, but may approve them before
10 days have elapsed. The DWC has requested a Jan. 1, 2005 effective date
for the regulations, which is consistent with deadlines contained in SB 899,
enacted as an urgency measure by the Legislature.

The emergency regulations are posted on Internet at www.dir.ca.gov
, click on rulemaking - proposed regulations in the left navigation bar. For
more information on SB 899, workers' compensation reforms passed in April,
visit the DWC Web site at www.dir.ca.gov/dwc.